$1.3bn spent on industrial properties in 4Q 2010

Investment spending in industrial properties increased over 90% and it is expected to surge in 2011.

According to DTZ Research, Ms Chua Chor Hoon, Head of South East Asia Research, commented, “Investments in commercial and industrial properties in Singapore are expected to be buoyant in 2011, as these sectors are in the recovery cycle unlike the residential market which is peakish and subject to government intervention. Existing REITS are expanding their portfolios and a number of new REITs are expected to be listed on the Singapore bourse this year. Investment spending in industrial properties which increased over 90% to $1.3bn in Q4 2010 are expected to increase in 2011 with Jurong Town Corporation having engaged DTZ Singapore as consultant to divest 4.7 million sq ft of its industrial space portfolio.”

Mixed use schemes continued to be the most popular sector in Asia Pacific during the fourth quarter of 2010, up 24% from Q3 2010 and comprising 50% of all activity. This is in line with the past two years which have seen over 44% (US$95bn) of all investment activity relating to mixed use schemes. Individual retail and office transactions remained the next most popular sectors amongst investors although both fell marginally during the last quarter.

The report shows that domestic investors continue to dominate purchasing activity, accounting for 88% of overall transactional activity. However, for the first time in two years non-domestic activity exceeded 10% in the fourth quarter.

David Green-Morgan, Head of DTZ Asia Pacific Research, said: "During the last quarter of 2010 we saw a further increase in inter-regional investment transactions, testament to the fact that fund managers from outside Asia Pacific are increasingly looking to extend their presence in the region. However, domestic activity still dominates the picture, typified by the recent sale of two thirds of Singapore’s Marina Bay Financial Centre to Singapore REITs worth over US$1bn. Furthermore, during the first half of 2011 we expect countries within the region - predominantly China and India, to be the main drivers of economic activity boosting exports from Japan, South Korea and Australia.”

Tony McGough, Global Head of DTZ Forecasting & Strategy Research, comments: “The long term economic prospects for Asia Pacific are positive and we predict that 2011 investment volumes will slightly exceed 2010 levels to reach US$155bn. As seen in our latest ‘Great Wall of Money’ report, the amount of available global capital targeting Asia Pacific is forecast to increase by 29% in 2011, with increasing levels of activity expected from overseas investors.”

David Green-Morgan, concludes: “The prospect of rising interest rates in the larger Asia Pacific economies will make commercial property investment more challenging, however, the opportunities for growth that exist in the region will continue to drive forward significant investment throughout 2011.”